1. Field of the Invention
The present invention relates generally to importation and customs, and more specifically to a trade compliance system and method that improves operational processes and assists in compliance with customs import regulations.
2. Description of Related Art
United States Customs requires that imported products be correctly classified within a complex classification system known as the Harmonized Tariff Schedule (“HTS”). Within the context of this system, the United States classifies products using 10-digit HTS codes. These codes are used, for example, for determining the applicable tariff rates on different types of products imported into the United States. The United States Customs Service is the responsible entity for administering the tariff and for processing import entries, and, as such, has significant responsibilities.
Companies that import products into the United States face equal responsibilities to comply properly with Customs regulations. Determining the correct HTS code to classify different product types for companies that import a large variety of products is, to say the least, a challenge. Examples of such products include computers, automobiles, appliances, and the like.
In the case of automobiles, many HTS codes may be necessary to classify the parts that are imported. For instance, an automobile includes a transmission system which, in turn, includes a variety of individual components. Each of these components may need to be assigned an HTS code. Assigning and tracking individual HTS codes manually can be a difficult task, particularly for major corporations involved in significant import or export activity. A need exists in the art to provide a method and system for efficiently classifying and managing such HTS codes.
Generally, the procedures associated with the importation of goods into a country are long and complex. An importer of goods ordinarily must classify products for the purposes of determining the applicable tariff, as discussed above. Classifications may involve assigning product attributes other than HTS codes, such as NAFTA certificates, FAA restrictions, Department of Transportation regulations, anti-dumping duties, countervailing duties, and others. In addition, a large number of parties may be involved in the importation process. The importer may be working with a large number of foreign manufacturers or suppliers. Each imported item needs to be accounted for, from an automobile down to, in some instances, a screw. In the case of automobiles, for instance, parts to be imported may come from a variety of sources, vendors and suppliers overseas. Information relating to the purchase and shipment of these parts from all of these sources needs to be maintained in some coherent fashion by the importer so that adequate records may be kept. In addition, significant amounts of regulatory documentation generally need to exchange hands as imported shipments are sent into the United States. Classification codes may also be initially incorrect. Subsequent information from third parties may bear on whether or not a given classification should be changed. For example, information obtained from various entities in the entry process, recent U.S. Customs Rulings, etc., may bear on whether initial classifications made by corporate analysts were correct in the first instance. In light of the complexities of the classification process, this subsequent information often gets lost in the mix.
For all of these reasons, importing companies sometimes make inadvertent errors in processing the necessary paperwork for customs. Shipment invoices, purchase orders, bills of lading, part categories, part quantities and attributes, entry packets, audits, amendments, documentation relating to a potential multitude of different vendors, suppliers, freight forwarders, customs brokers, and a host of other issues pertaining to import compliance further complicate an already complex process. Present systems and methods utilized by some importing companies may not meet all of these needs.
The import process itself can be extremely complex, particularly for a large business entity. At least four distinct phases of operation may exist as part of this process—namely, (i) the pre-entry or classification process, (ii) the entry process, (iii) the post-entry process (including audits and payment balancing), and (iv) the amendment process. Each such phase often includes a complicated set of procedures, many of which are dependent upon or interrelated to other procedures. These phases usually also include a complex set of data concerning importation procedures, which data contains many other relevant dependencies and interrelationships. These procedures and interrelationships must be often be integrated and managed in a coherent and meaningful way so as to ensure full compliance with U.S. import regulations.
Managing and communicating necessary information to and from an importer and a customs broker can also be important. Customs brokers are appointed by the importer to prepare the necessary paperwork for a given shipment or set of shipments, such as a U.S. Customs 7501 form, a commercial invoice, and a shipment manifest, and to present those forms to U.S. Customs when the goods are imported into the country. Customs brokers may also tender tariff payments to U.S. Customs and are subsequently reimbursed by the importer.
The records kept by the importer and the records generated by the customs broker can be inconsistent. As such, audit procedures may need to be performed wherein discrepancies can be readily identified and appropriate corrections can be made. Existing procedures are error-prone due in part to the potentially large amount of information applicable to an audit, clerical errors in data entry or examination, etc.